What the oil companies won’t do, Wal-Mart may. The world’s largest retailer said last week it may offer ethanol-based E-85 fuel at nearly 400 of its gas stations in the U.S.
Although company officials say they’re not making a definite commitment, they obviously have been studying the situation carefully. At a Washington meeting that included industry, government, and academic sectors, Wal-Mart execs discussed ways to develop an infrastructure for supplying E-85 fuel to stations at its stores and Sam’s Clubs.
“We are absolutely considering E-85,” said Kevin Gardner, a Wal-Mart spokesman. “We’re looking to work with the business community to identify strategic partners to further our efforts in the alternative fuels arena. We’re looking at and considering a lot of things, but we just don’t have anything to announce right now.”
E-85 is a blend of 85 percent ethanol and 15 percent gasoline. Although ethanol can be produced from a wide variety of cellulosic materials, most of what’s made in the U.S. is from corn. As of May, 97 plants were in operation, producing 4.5 billion gallons.
Needless to say, a possible Wal-Mart link to E-85 makes the National Corn Growers Association happy. It’s chief executive, Rick Tolman, said Wal-Mart’s offering E-85 would help solve a major obstacle — the lack of locations dispensing the fuel.
Industry sources report there are currently slightly more than 600 retail locations for E-85 in the entire country, most of those in the Midwest.
Auto manufacturers have been cranking out vehicles with “flex-fuel” engines for several years, chiefly to take advantage of government incentives that allow them to sell more gas guzzlers in return. They haven’t, until recently, promoted these vehicles, and many who’ve bought new vehicles in the past five years aren’t even aware they could burn E-85…if it were available.
It’s estimated that more than 5 million vehicles already on the road can use E-85, and thousands more are rolling off the assembly lines each month.
National Corn Growers’ Rick Tolman says Wal-Mart’s commitment to the E-85 market would not only make the fuel more widely available and create additional demand for U.S. corn, it would also create more competitive pressure on Big Oil to offer E-85.
The oil companies, understandably, have been reluctant to commit billions of dollars to carrying a fuel that will cut into the market for the gasoline that’s generating profits at historic levels.
A Wal-Mart move into E-85 could well be the catalyst needed to get this country’s head out of the sand with regard to the need to lessen its dependence on an increasingly volatile petroleum market. The government has been dragging its heels for more than 30 years on a commitment to alternative fuels (while Brazil has shown the world how it’s done by almost achieving fuel self-sufficiency with ethanol from sugarcane), and despite recent posturings by the administration and Congress, little concrete action has been taken.
Wal-Mart may not be as big as Big Oil. But it’s got financial clout and unparalleled marketing savvy. It may just be the linchpin of a fuels revolution.